According to a 2022 car rental report by Mordor Intelligence that describes Africa and South America as "low-growth" regions, the global car rental market was worth $119.28 billion in 2021 and is expected to reach $223.07 billion by 2027 with a cumulative annual growth rate of more than 11% between now and 2027.
Despite this classification, some African startups operating in the sector have continued to make efforts that will enable their participation in this multi-billion dollar market. For instance, Nigeria-based Treepz recently expanded to its fourth African market.
Yesterday, South Africa-based vehicle rental startup, Planet42, announced that it has closed a $100 million investment round; the fund comprises $15 million of equity from new and existing shareholders, including Naspers Limited, Andrew Rolfe, Change Ventures, $10 million of debt from shareholders, and a $75 million credit facility from Rivonia Road Capital.
According to Planet42 CEO, Eerik Oja, the funding will be used to scale the company's operations in South Africa and Mexico. "In South Africa, we want to put the pedal to the metal using this new financing to quickly add about 10,000 more cars to the fleet," Oja told Bloomberg. "In Mexico, we are exploring where best to find customers, and how to switch on dealerships, so it takes time to get the ball rolling, but we have started to test the market and have about 250 cars on that side."
Oja further stated that South Africa and Mexico are similar markets "in terms of income and car penetration and development or lack thereof, of financial services and [access to public transport systems]"
Planet42 employs proprietary algorithms and data points to score a customer’s risk level and generate an offer to buy a car from a dealership of choice within minutes. The startup claims to have almost a thousand car dealerships in its network, which generate about 40% of its sales.
In December 2021, Planet42 said that it distributed more than 7,000 cars to customers in South Africa, it also claimed to have purchased over 5,000 vehicles in the African country in the last 12 months. Also, the mobility startup commenced an expansion drive into Mexico in 2022 and has since delivered 250 cars to customers there, according to TechCrunch.